Recent Posts

About

Hosni Mubarak, who ruled Egypt with an iron fist since 1981, became synonymous with despotism and corruption. Despite weeks of recent protests, he refused to hand over power. But on Friday, Egypt's vice president announced that Mubarak was stepping down and turning power over to the military. While much of the attention has focused on Mubarak's dictatorship, most Americans don't realize that he'd actually won international kudos for his handling of the economy.

Economic improvement has been a long, slow process. Since 1991, Mubarak's policies have reduced the size of the government and increased the size of the private sector.

Two years later, he promised Judy Woodruff of The PBS NewsHour that change was coming slowly but surely: "At the same time we are making reform to the economy with another two, three years. There will be stabilization. At the same time we are working hard to raise the standard of the people who have been affected, but we can't do it overnight."

Reform, however, languished during the rest of the 1990s. The economy took another hit in 1997, when terrorists massacred 58 foreign tourists in Luxor, sending the country's $11 billion tourism industry -- which represents 11% of Egypt's gross domestic product -- into a tailspin. But tourists began returning in subsequent years, although they're now staying away in droves because of the recent political turmoil. (Experts say it's costing the country $300 million in lost business.)

Improving the Egyptian Economy

Mubarak began undertaking reforms in earnest in 2004. As the U.S. State Department noted, Mubarak's team "simplified and reduced tariffs and taxes, improved the transparency of the national budget, revived stalled privatizations of public enterprises and implemented economic legislation designed to foster private sector-driven economic growth and improve Egypt's competitiveness."

The policies did yield some benefits. GDP grew around 7% between 2005 and 2008, although it then dipped below 5% as the global economic crisis unfolded. Officials from the International Monetary Fund and World Bank were impressed.

"Sustained and wide-ranging reforms since 2004 had reduced fiscal, monetary, and external vulnerabilities, and improved the investment climate," according to a 2010 IMF Report. "Investors' confidence in Egypt and appetite for risk have improved since March 2009, and the stock market reversed course, capital inflows resumed, and official international reserves have been rising."

The World Bank spoke of the "reform path" that the Egyptian government began in 2004, arguing that it " established a solid track record as one of the champions of economic reforms in the Middle East and North Africa region." Officials praised the Mubarak regime for its business-friendly policies such as lowering taxes and tariffs.

Improvements Didn't Trickle Down

The Egyptian government, like its U.S. counterpart, has boosted spending and slashed interest rates to restart economic growth in the wake of the Great Recession. It has had some limited success. According to the World Bank, real GDP grew 5.3% in the 2010 fiscal year, up from 4.7% in 2009, but still below the rates recorded during the economic boom.

Still, many Egyptians continue to live in grinding poverty, with 44% either illiterate or semi-literate. According to the CIA's The World Factbook, about 20% of Egyptians live below the poverty line. And those that are educated often are underemployed and working multiple jobs to sustain themselves, says David Schenker, Director, Program on Arab Politics at the Washington Institute for Near East Policy, in an interview with DailyFinance.

Inflation was an astounding 12.8% in 2010. Corruption is rampant, and sweetheart deals are common. The country's education system has been such as disaster that businesses often hire foreigners, claiming that they are better trained than Egyptians.

'The economy is doing great in a wider sense," Schenker says. "There was no trickle-down. ... Your average Egyptian guy on the street did not see" the benefits.

Socially Responsible Investing

What is Inflation?

Add a Comment

100 Comments

Filter by:

stevecelt

This article makes little sense, and appears designed to confuse. It contradicts itself in many of its paragraphs........ The key point is that Mubarak, after being given billions, did very little to help the people of Egypt.

SNEAKY..........Plus they can keep prices up where MOST can not afford it,AND make it look like the country is stabilizing....Just keep pumping that old balloon,it will POP again!!!!(Frackin corporations,bankers,and real estate scum)....It SHOULD GO LOW TO LET THE POOR HAVE A CHANCE......O;(

Much of Egypt's problema are due to severe overpopulation. Leads to shortages of food and housing and higher prices for everything. Even our own country has too many people. High unemployment and high prices for a lot of things are due to overpopulation. And we don't have nearly enough jobs, and because a surplus of people no one will pay much for employees.

44% of the population is illiterate. There is no excuse for that. Starting vegetable or fruit gardens for the poor in exchange for attending reading classes is something any Government can do to improve the lives of the poor. Other articles stated the daily pay is $3.00 and starvation is widespread. In the USA this Spring get involved with a COMMUNITY Vegetable Gardening Project. Invite Foreclosed Homeless who are without housing to join the Vegetable Gardening Club.

idiot. he came from a poor town and estimates are he is now worth between 40-70 billion and was in power for 30 years do the math. heard 40% of population lives on less than $2 a day. military didn't need the public they could have marched in on him and told him is done as in 1952 overthrow of king. how you gonna get 8 mil. people into any square in the world? there were marches in other cities too. mubarak supporters were paid about $9 to march and fight and intimidate anti-mubarak marchers. how bout the secrete police and their powers. please know at least some facts before you post and prove yourself to be an idiot. sorry no hoaxes here. try talking to an egyptian. i have.

His economic achievements? The PEOPLE wanted him gone, or don't you get it? His conservative dictatorship just didn't cut it! We don't need it in our country either! The Rich,Elite, and BigBiz kept the middle class down for so long. America has been tolerating this same scam against the people of our country from the conservatives promoting the rich and elite! It's time for it to stop and let Obama do his job! We don't need to go the same path as the Egyptians!